Welcome to your April edition of the FishNeedWater newsletter!
Here’s what we’ve got coming up:
- Landlords: yup, MORE restrictions.
- Vendors: what happens after the sale has been agreed?
- All the latest need-to-know news.
- Top tool: a London price tool.
Landlords: will you still be able to get a buy-to-let mortgage?
You may have heard about the Bank of England’s proposed “crackdown” on property investors. In an attempt to curb a potential rise in risky lending, the Bank has set out new minimum standards for lenders to follow when deciding who to lend to.
If it goes ahead, lenders will be expended to do the following:
- Check that rental income will be sufficiently higher than the monthly mortgage cost (the “income coverage ratio”, or ICR)
- Take into account additional costs (such as management charges and letting agency fees) when calculating the income coverage
- Consider the new, higher tax that will apply to BTL investors’ income from 2017 when working out the coverage ratio
- Take greater interest in borrowers’ other sources of income, where these are being relied upon by the lender
- Build in the likelihood of interest rates rising by at least two percentage points — and check that the deal would still be affordable after that
Before you become mega despondent for the third time since October, it’s important to remember a couple of things. Firstly, these are just proposals: nothing has happened yet, and we don’t know if/when anything will be decided.
The second point is that this won’t affect remortgaging “where there is no additional borrowing beyond the amount currently outstanding”, even if you want to refinance with a different lender – so you can still shop around for the best deals.
While nothing’s set in stone, the uncertainty isn’t exactly fun. If you’d like to chat about how the new rules might affect your future investment strategy, give us a call and we’ll be glad to help: 020 3199 3439.
A swift sale – is it really that hard?
It’s been a crazy month in the property world: the looming end of the tax year had investors scrambling to complete on properties before the new stamp duty thresholds came in. Many failed – and as a result they’ll be paying at least a few thousand pounds more than they’d originally planned.
Could this have been avoided? Is it really so hard for properties to complete in good time? We’d be fibbing if we said it’s always a doddle – especially when the rest of the country is trying to do the same and everyone’s busy as anything. But at the same time, no. No it’s not so hard – not if you have agents who know what they’re doing.
Here’s the thing: the hard work really starts once the sale is agreed – but it’s often at this point that estate agents congratulate themselves on a job well done and leave the rest to the solicitor. When you’re trying to sell your place, it’s frustrating to be waiting around for stuff to happen – especially if you’re part of a chain.
An estate agent needs to keep things moving, at all times, through to completion. We see it as a fundamental part of our job to cajole, pester, demand, and do whatever it takes to ensure the sale goes through. Over two-thirds of deals fail AFTER the sale has been agreed – and it’s often because no one took responsibility to “project manage” and keep everything on track.
We stay involved right the way through – right until you’re sick to the back teeth of us. But it’ll be worth putting up with our lame jokes and constant updates, because you’ll have a lovely sum of cash and relatively low stress levels by the end of it.
It’s been a busy ol’ month…
Property prices skyrocket in towns near London. People priced out of London are heading for Slough, Luton and Reading.
London property crisis: Qatari investors now own £1bn in Mayfair real estate. That’s over a quarter of Mayfair.
These 2 property charts show that London might as well be its own country. The regional discrepancy is rather shocking.
London’s new live-work flats: “co-living” is the capital’s new property trend as shared spaces slash costs. With high living expenses and commuting hassles, young Londoners are opting for shared live-work spaces to meet like-minded people, boost productivity – and slash costs.
Our useful tool of the month
You’ve probably spent more than your fair share of time on Rightmove, but have you ever seen its “London House Price Trendometer”? It’s a nifty little website, which shows the growth and decline of property asking prices by borough since October 2001. You can track the changes in the local cost of property over the years, and understand the key events that have affected the market. As well as being thoroughly useful, it’s also lovely to use.
The end! (Until next month.)